Core views:

Event: World Show released its quarterly report for '23. In the first three quarters of 2023, the company achieved revenue of 3.17 billion yuan, a year-on-year increase of 2.04%; net profit of the company was 113 million yuan, a year-on-year decrease of 44.79%, mainly due to the impact of the market environment, the increase in media procurement costs. At the same time, the gradual acquisition of shares in subsidiaries and the disposal of shares in non-main subsidiaries during the same period last year generated large investment income; net profit after deduction of 92.74 million yuan, a year-on-year decrease of 38.39%; 23 million yuan in the first three quarters of the year, the company lost 258.48 million yuan in credit impairment, compared to 2.32 million yuan in the same period last year.

Looking at the single quarter in 23Q3, the company achieved revenue of 1,061 million yuan, up 4.21% year on year, down 8.1% month on month; net profit of 42.76% year on year, up 14.1% month on month; net profit after deduction of 43.68 million yuan, up 32.68% year on year, up 35.1% month on month, mainly due to the company's continued cost reduction and efficiency, personnel optimization, and labor cost reduction.

Looking at the business situation, according to the company's public account, the celebrity marketing business has stabilized, and the number of double-ended user registrations on the WEIQ celebrity marketing platform continues to grow, empowering more mid-range and long-tail creators. At the same time, the functions of the AI-empowering tool Inspiration Island continue to be updated. According to the Inspiration Island public account, corresponding to different content creation scenarios, the platform has pre-set more than a dozen AI creation functions, and the number of users is growing steadily. Q3 The innovative business continues to advance: According to the company's official account, TopHolder became the digital key distribution platform for the Fantasea Music Universe; the company became one of the first partners of the Beijing Digital Research Institute, and the cultural and creative brand alliance chain with technical support from Tianxia Xiuxing Mining Technology has become the underlying basic chain of the Beijing Digital Institute's asset registration platform, providing technical support for the future digital asset registration and transactions of the North Digital Research Institute.

Profit forecasts and investment advice. As a leading company in the celebrity economy, the company has some room for performance repair. It is estimated that the company's revenue for the year 23-24 will be 4,379/5.092 billion yuan, respectively; net profit from the mother will be 145/248 million yuan, respectively. The marketing market is expected to recover further in '24, and innovative business will enable more industries to implement new business format scenarios. The company will be given 50X PE in '24, corresponding to a reasonable value of 6.85 yuan/share, maintaining a “buy” rating.

Risk warning. (1) The growth rate of the advertising market fell short of expectations; (2) celebrity marketing competition intensified; (3) Web 3.0 development fell short of expectations.